Lebanese president links central bank audit to fighting corruption

“Our reality today is not promising,” Aoun said in a televised speech.
Sunday 22/11/2020
 Khaldoun Jaber, a Lebanese anti-government activist, stands next to graffiti decrying corruption, in Beirut, Lebanon. AP
Khaldoun Jaber, a Lebanese anti-government activist, stands next to graffiti decrying corruption, in Beirut, Lebanon. (AP)

BEIRUT--Lebanese President Michel Aoun said on Saturday that a forensic audit of the central bank was vital to combat corruption and that he would put it back on track following the withdrawal of the consultancy hired to do the audit.

Aoun said “interest-driven roadblocks” had derailed the audit, which is a key condition for foreign donors to help Lebanon out of a deep financial crisis that has posed the biggest threat to its stability since its 1975-1990 civil war.

Among Lebanon’s multiple crises are growing poverty, a political vacuum, coronavirus and the fallout from a massive explosion at Beirut port in August that killed 200 people.

“Our reality today is not promising,” Aoun said in a televised speech to mark Independence Day, adding that Lebanon was a prisoner of corruption, political scheming and external dictations.

“If we want statehood, then we must fight corruption … and this begins by imposing the forensic financial audit,” he said, adding he would not “back off” on the issue.

The caretaker finance minister announced on Friday that the restructuring consultancy Alvarez & Marsal had pulled out of the audit because the central bank had not provided all the information required to carry out the task, citing bank secrecy.

Lebanese President Michel Aoun delivers a televised address on the eve of the country’s 77th independence day, at the presidential palace of Baabda, November 21. DPA
Lebanese President Michel Aoun delivers a televised address on the eve of the country’s 77th independence day, at the presidential palace of Baabda, November 21. (DPA)

Lebanon has not yet formed a new government since the last one was brought down by the blast. Saad al-Hariri, the Sunni prime minister-designate under a sectarian power-sharing agreement, is struggling to form a cabinet amid turf wars.

France, the United States and other donors have made clear there would be no bailout unless a credible government is formed to enact long-demanded reforms to tackle endemic waste, corruption and mismanagement.

Aoun said unified criteria should be used to form a government, referring to what official sources say has been his insistence – along with his influential son-in-law, Gebran Bassil – on nominating Christian ministers.

The Lebanese president also touched on US mediated talks between long-time foes Lebanon and Israel to demarcate their sea border, saying he hoped they would bear fruit but that Lebanon would hold onto its “full sovereign borders”.

Restructuring consultancy Alvarez & Marsal has pulled out of a forensic audit of Lebanon’s central bank because it did not receive information required to carry out the task, caretaker Finance Minister Ghazi Wazni told Reuters on Friday.

The decision was described as a blow to Lebanon as it attempts to extricate itself from a financial crisis, rooted in endemic waste and corruption, that has crashed its currency, paralysed banks and prompted a sovereign debt default.

The audit is a key demand of foreign donors and the International Monetary Fund, whose talks with the caretaker government stalled over inaction on long-demanded reforms and an internal dispute about the size of losses.

“The wall of corruption is very thick and very high … Today they felled the forensic audit,” tweeted caretaker Prime Minister Hassan Diab, who has criticised the central bank for citing bank secrecy to withhold data.